Country lags after 4-year liberalisation
After four years of trade and investment liberalisation in Asean, Thailand has seen its market share decline in the region, becoming less attractive for foreign direct investment while at the same time becoming less capable of expanding, according to a study by the University of the Thai Chamber of Commerce.
The university’s Centre for International Trade Studies (CITS) found that Thailand was relatively uncompetitive because its marketing prowess was less developed than its rivals’, and there was little support for small and medium-sized enterprises. Meanwhile other Asean countries, particularly Indonesia, Vietnam and Myanmar, have shown increasing potential to trade and draw investment over the past four years.
“If Thailand does nothing to improve its marketing and investment attractiveness, it will continue to lose market share in Asean, and will surrender its status as Asean’s third-largest investment hub for the world market in the next few years,” said Aat Pisanwanich, director of the CITS.
He suggested the government support the setting up of a “trading plaza” for distributing Thai goods in Asean. Investment in Asean countries by Thai enterprises, especially SMEs, should be supported.
Thai enterprises should also cooperate with local partners in Asean states to set up trading companies so that they can distribute their products in other countries easily.
The centre’s study shows that Thailand’s share of the Asean market is behind those of Malaysia and Singapore. The growth rate of Thai exports to other Asean countries has also dropped considerably, from 20.7 per cent in 2012 to only 1 per cent last year. Market share also fell in that period but not as severely – from 18 per cent in 2012 to 17.7 per cent last year.
Aat said it was highly possibility that Thailand would continue lose market share, mainly to Indonesia, Vietnam, Malaysia and Myanmar. This year, it could fall below 17 per cent.
As of last year, Singapore commanded a 41.3-per-cent export-market share in Asean, followed by Malaysia at 19.2 per cent, Thailand at 17.7 per cent and Indonesia at 11.3 per cent.
Products for which Thailand has lost market share to other Asean countries are mainly rice, frozen seafood, petroleum and coal, paper and printing products, tapioca, garments, palm oil, coffee, rubber, plastic products, sugar, automobiles and parts, rubber products, and fruits and vegetables.
Aat pointed out that Indonesia would get a bigger share of the market for automobiles and parts because more investment from Japanese automakers is going to that country. With strong domestic demand and a large population and workforce, Indonesia will soon be the new hub for Japan’s automobile industry.
Vietnam now draws more investment from South Korea and Japan in the garment industry, and for mobile phones.
The Thai beverage industry is also at risk of losing competitiveness in the near future, as more foreign firms have invested in other Asean countries.
Myanmar will soon be able to produce more goods for export after foreign direct investment has flowed into the country.
The CITS found that over the past four years (2010-2013), Singapore had drawn the most FDI in Asean at US$230.4 billion, followed by Indonesia at $70.6 billion, Malaysia $43.6 billion, Thailand $36.5 billion, Vietnam $32.8 billion, the Philippines $10.2 billion, Myanmar $8.3 billion, Cambodia $4.4 billion, and Laos $1.2 billion.